Question

“Profits seem to have a different meaning for economists. Surely it can’t be that complicated; profits equal sales revenues minus costs? I am particularly confused by the conclusions they draw about ‘normal profit’. How can you have any profit when average total cost exactly matches a business’ average total revenue? How can it be ‘normal’ to earn zero profits?”

Discuss these contentions. In your discussion, you should highlight the meaning of costs and profit used by economists and contrast it with the focus given by accountants. Give some examples of decisions you may make in business when an economist's definition of costs would be more relevant